Daily currency report

As expected, trading focused on two key events: the European Central Bank's interest rate decision and the G20 summit. While the leaders of the world's largest economies met in London to tackle the financial crisis gripping the global economy, the ECB's Monetary Policy Committee announced a 25 basis point interest rate cut. The conservative reduction was greeted with surprise and allowed the single currency to claw back some of its losses, with investors drawn by the higher yield on offer. However, investors and traders alike were mindful of the G20 summit and an air of confidence saw a renewed appetite for risk. Sterling proved to be the biggest benefactor as it rose against all major currencies.

Sterling

Sterling enjoyed another day of gains as a combination of positive data and confidence surrounding the G20 summit saw investors return to the pound. The news that housing prices climbed up by 0.9 per cent was welcomed by the markets, however the figures were unexpected and commentators generally agree that it is too early to tell if the housing market has "bottomed out".

US dollar

The dollar fell foul of a renewed appetite for risk as the G20 summit raised confidence. Investors and traders returned to equity markets with stock exchanges across the world posting significant gains at the dollar's expense.

Euro

The European Central Bank was widely tipped to cut interest rates by at least 50 basis points which led to the single currency being sold off ahead of the announcement. However, the bank managed to take markets by surprise as a 25 basis points cut was announced. This allowed the euro to regain some lost ground but it still ended the day down against most of the major currencies.

Japanese yen

With no information out from the world's second largest economy, the yen was mainly driven by external factors.